Editor's Note:

Good evening. We closed SINA today for a loss and TIE for a gain. The loss in SINA and the gain in TIE essentially offset each other. I suggest readers consider closing short positions on weakness tomorrow. S&P futures are down almost -10 points as I write this but this is creating an oversold market and we must be smart in taking profits when the opportunity presents itself. That time could be tomorrow morning. There is inevitably going to be a relief rally and we have long positions to take advantage of the bounce. If there is a hard sell-off we'll just need to honor our stops if they are hit and get out of the way, but we have room below on our long positions to give them time to work. I'm still focused on an S&P range in the 1,115 to 1,155 area (lowered from 1,170 after today's sharp reversal). However, I also continue to believe there is much more downside risk than upside opportunity so staying nimble is paramount. This environment remains difficult to manage swing trades but the important thing is we are booking more profits than losses in our model portfolio. Please email me with any questions.

Current Portfolio:

BULLISH Play Updates

AMR Corp. - AMR - close 7.09 change -0.22 stop 6.60

Target(s): 7.95, 8.25, 8.65
Key Support Areas: 7.00, 6.85, 6.75
Key Resistance Areas: 7.64, 8.00, 8.30, 8.70
Current Gain/Loss: -1.80% Time Frame: Several weeks
New Positions: Yes with a tight stop

AMR gapped higher at the open but then immediately sold off which enabled us to initiate long positions at $7.22. It appeared as if AMR found support and was headed higher but the overall market weakness was simply too much. AMR has good support at the levels mentioned above. I am expecting these levels to hold but if they don't we'll step aside if our stop is hit. I'll leave my comments from last the play release as they are still valid. Prices of AMR stock are coiling from a period of higher lows and lower highs dating back to October 2008. The stock is sitting on an upward trend line dating back to March 2009 and appears to be headed up to the longer term downtrend line which is near $9.00. The stock also just broke out above a shorter term downtrend line that started with the highs on April 26th and has turned down to retest the backside of that trend line. AMR also made a double bottom at about $7.00 from 5/12 and 5/17 and bounced nicely. There is also strong support $6.85 which provides a great reference point to place a stop just below at $6.60. I am looking for AMR to rally up to $7.95 which is our first target and about +9% from current levels. Our second and third targets are $8.25 and $8.65 respectively.

Current Position: Long AMR stock at $7.22

Entry on May 18, 2010
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 19 million
Listed on 5/15/10, 2010

Broadridge Financial Solutions - BR - close 21.06 change -0.26 stop 20.36

Target(s): 22.40, 22.75
Key Support Areas: 21.00, 20.50
Key Resistance Areas: 22.00, 22.45, 23.00
Current Gain/Loss: -0.89%
Time Frame: Several weeks
New Positions: Yes

BR broke through the upward trend line from October 2, 2009 today as the overall market was under pressure. Now BR finds itself sitting on an upward trend line that began on October 30, 2009 as well as horizontal support at $21.00. All of these levels are good set-ups to initiate long positions but if the overall market continues to be weak the levels don't really matter. I am cautiously positioning for a relief bounce here and my thesis for initiating BR. The stock has support here and at $20.50. If that level is broken we'll step aside. My comments from the play release remain valid. I believe the stock is poised to bounce from here. The stock also has strong horizontal support just above $21.00 and again at $20.75 and $20.50. Our stop will be below these levels at $20.36. From a fundamental perspective BR trades at a low 13.3 PE ratio and I believe this stock would benefit from financial reform due to the record keeping and technology services they specialize in. I believe the overall market could bounce from here as well which will help long positions. Our time frame several weeks and our target $22.40.

Current Position: Long BR Stock at $21.25.

Entry on May xx
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 1.2 million
Listed on 5/15/10, 2010

Dr. Pepper Snapple Group - DPS - close 38.12 change +0.12 stop 32.49

Target(s): 36.80, 38.80
Key Support Areas: 35.75, 34.75, 32.70
Key Resistance Areas: 36.80, 37.45
Current Gain/Loss: N/A
Time Frame: Several weeks
New Positions: Waiting for trigger

DPS just won't quit. Rumors were flying today that they are a takeover candidate and the stock peaked its head out to a new 52 week high. DPS may have formed a double top though and if it follows through to the downside we may still get triggered. From a contrarian point of view the double top could even be a good short trade but you must be quick for it to work. I won't step in front if it but would welcome a long position if DPS pulls back to its 20/50-day SMA, which it has to at some point. For this reason I would like to leave this position open for a few more days to see if selling kicks in. So we will wait patiently for the pullback to our trigger near $35.00. If there is significant weakness in the market DPS should make it down here and I want to be ready to take advantage of it. If triggered our stop is $32.49. Please keep your position size small since the market has been so volatile.

Suggested Position: Long DPS stock if it trades near $35.00

Entry on: May xx
Earnings Date: More than 2 months (unconfirmed)
Average Daily Volume: 1.9 million
Listed on: May 8, 2010

Quicksilver Resources, Inc. - KWK - close 12.47 change -0.12 stop 11.75

Target(s): 14.25
Key Support Areas: 12.35, 12.00
Key Resistance Areas: 13.25, 14.00
Current Gain/Loss: -1.81%
Time Frame: Several weeks
New Positions: Yes

KWK held up fairly well today all things considered. The stock traded over $13 in early trading before closing -0.95% lower. The stock remains near the bottom of its 9-month sideways channel which was our basis for taking the trade. In addition, natural gas has built a nice base over the last two months and I believe the commodity and natural gas stocks are due for a rally. KWK has exhibited great overall strength during the past week as the overall market has been under pressure. The stock has very strong support at $12.00 which was a prior resistance level dating back to October 2008. We are looking for a move up to the $14.25. But I also encourage readers to take profits if KWK gets legs and pushes up over today's highs. The stock broke an upward trend line from November 2009 a couple of weeks ago and I am looking for it to turn back higher and retest the back side of that trend line which is right where our target. This price is about +11% higher than today's price. KWK made a double bottom from 11/2009 2 weeks ago and has responded nicely.

Current Position: Long KWK Stock at $12.70.

Entry on May 17, 2010
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 3.0 million
Listed on 5/15/10, 2010

BEARISH Play Updates

Baidu, Inc. ADR - BIDU - close 71.57 change -1.61 stop 79.10

Target(s): 71.50 (hit), 65.10
Key Support Areas: 71.40, 68.50, 65.00
Key Resistance Areas: 75.64, 78.50, 82.25
Current Gain/Loss: +3.61%
Time Frame: Several Weeks
New Positions: Yes

BIDU hit our first target of $71.50 today. Conservative traders may want to exit positions at current levels or on any further weakness to protect profits. BIDU looks vulnerable from here but if there is a bounce in the overall market we may endure a little pain before it heads back down. We need BIDU to break and close below $71.50 to get moving towards our final target of $65.10. From a fundamental perspective BIDU trades at a PE ratio of about 100 which makes no sense when compared to its American counterpart GOOG which trades at a PE of about 23. Our stop is $79.10 which is above last Wednesday's high. This stock can be volatile and is prone to gaps so please be smart when considering position size.

Current Position: Short BIDU stock at $74.25.

Option Traders:
Suggested Position: Buy JUNE $73.00 PUT

Entry on May 14, 2010
Earnings July 15, 2010 (unconfirmed)
Average Daily Volume: 68 million
Listed on May 13, 2010

Leggett & Platt, Inc. - LEG - close 23.83 change -0.35 stop 25.35

Target(s): 23.00, 22.25
Key Support Areas: 23.75, 23.42, 23.00
Key Resistance Areas: 24.75, 25.15
Current Gain/Loss: +1.04%
Time Frame: Several Weeks
New Positions: Yes

LEG gapped higher this morning near our key resistance level of $24.75 and then sold off the remainder of the day. On the intraday charts LEG may be forming a bullish inverse head and shoulders pattern. If the market is strong tomorrow this is probably going to bode well for LEG. If not, the pattern will probably fail. Our position is up +1% right now but we may have to live through a bounce for LEG to ultimately reach our target. From a bearish perspective LEG is piercing the bottom wick of yesterday's price bar and also closed below its 20-day SMA. And LEG is still below its downward trend line which started on April 30. However, we need LEG to break through $23.75 and yesterday's low of $23.42 to keep things moving in the right direction. I am going to list a new first target of $23.00 which is just above the stock's 50-day SMA and the low on May 10th. If LEG breaks $23.42 support we should see the 50-day SMA in short order but I wouldn't try to squeeze out the remainder of the gap between $23.00 and the 50-day SMA. Rather, I suggest readers take profits or tighten stops to protect profits. We would gain +4.50% if LEG trades down here which and I suggest taking profits and not holding through any bounce.

Current Position: Short LEG stock at $24.00

Option Traders:
Suggested Position: Buy JUNE $25.00 PUT

Entry on May 17, 2010
Earnings More than 2 months (unconfirmed)
Average Daily Volume: 2 million
Listed on May 15, 2010


Titanium Metals - TIE - close 16.65 change -0.57 stop 14.70

Target(s): 17.30, 18.00
Key Support Areas: 16.00, 15.50, 15.00
Key Resistance Areas: 16.00, 16.70, 17.25
Current Gain/Loss: +6.46%
Time Frame: Several weeks
New Positions: Yes

Our TIE trade has worked out very nice in such a short amount of time. TIE gapped open higher today and traded all the way up to $17.58. The stock proceeded to sell-off rather quickly but found legs again and traded up to $17.44. Our target of $17.30 was hit twice so we are flat on the position for a +6.46% gain. With the overall market weakness here I'm happy with the gain and will take the profit. For readers who still have positions please protect profits and don't let this turn into a losing position. Intraday support is tough to determine but in reality there isn't much until $16.00. $16.40 may provide some sort of bounce.

Closed Position: Long TIE Stock at $17.30, entry was at $16.25

Annotated chart:

Entry on May 17, 2010
Earnings Date 8/4/2010 (unconfirmed)
Average Daily Volume: 3.8 million
Listed on 5/10/10, 2010


Sina Corporation - SINA - close 37.57 change +2.72 stop $37.05

Target(s): 33.25 (hit), $33.50, 32.50, 30.50
Key Support Areas: $33.40 32.50, 30.50
Key Resistance Areas: 35.40, 36.00, 36.80
Current Gain/Loss: -6.01%
Time Frame: 1 week
New Positions: Closed

Ouch! I broke my rules and paid for it with SINA. SINA reported earnings after the bell that were better than expected but their Q2 revenue forecast was lower than consensus estimates. The forecast didn't seem to matter as investors piled into the stock. I am frustrated with the way I managed this trade. Essentially I let a winner turn into a loser, did not take profits when we hit our target of $33.25, and decided to hold the position over earnings. All mistakes that I typically avoid and it reinforces the importance of following rules. But its not the end of the world and the recent winners we have booked eases some of the pain. In any event, we'll pick ourselves up, note the mistakes, and look for better opportunities. Every trade can't be a winner.

Closed Position: Short SINA stock at $37.05, entry was at $34.95

Annotated chart:

Entry on May 4,2010 at $34.95
Earnings Date May 17, 2010 (unconfirmed)
Average Daily Volume: 1.1 million
Listed on May 1, 2010